USA's GDP Decline Less Than Expected

NEW YORK (CNNMoney.com) -- The pace of economic decline slowed substantially in the second quarter, as the U.S. economy shrank at an annual rate of 1% -- far less than it did in the first quarter, according to a government report released Friday.

Economists surveyed on Briefing.com expected the GDP to contract by 1.5%.

GDP is the broadest measure of the economy, which has been mired in recession since December 2007, worsening in recent quarters. The fourth quarter of 2008 and first quarter of 2009 measured the worst two quarterly declines in 26 years -- the nation's gross domestic product fell a revised 5.4% and 6.4% respectively.

The slower second-quarter contraction was largely due to a smaller decline in exports and business inventories as consumer prices and government spending rocketed higher.

Businesses spending fell by 8.9% last quarter, compared with a 39.2% drop in the first quarter. The decline in business inventories also took a significantly smaller bite out of GDP in the most recent quarter than in the previous two.

Federal government spending grew by 10.9% in the quarter, after falling by 4.3% in the first quarter. That was only partially aided by the stimulus program, as very little of Recovery Act funds were spent between April and June.

That partially offset a 1.2% decline in consumer spending, which makes up about 70% of GDP. In the first quarter, consumer spending was actually up 0.6%.

GDP has contracted for four straight quarters -- the first time that has happened since the Commerce Department began tracking that measure in 1947. But the most recent quarterly decline is the smallest since the second quarter of 2008, giving hope to some economists that the recession is at or nearing an end.

Farewell recession? Lakshman Achuthan, managing director of the Economic Cycle Research Institute, said the GDP number was encouraging, and he expects the recession to come to an end this summer. While GDP is a trailing indicator, he said the change in direction suggests the worst is behind us.

"As we suspected, things got a lot less bad in terms of economic activity. It means we turned a corner earlier this year in terms of the severity of the recession," he said. "The free market correction is abating quickly."

Achuthan said the recession turned into "an abyss" last fall as the credit market froze. But trillions of dollars in government programs to ease credit have largely succeeded, which helped normal business cycle dynamics take over.
0:00 /4:32Recession spoils Obama's plans

"The vicious cycle is become virtuous," he said. "Confidence is returning, pent-up demand is creating higher prices, and the economy is getting stronger."

ECRI's leading indicators, which predict future economic conditions, have rocketed to a five-year high. Achuthan said that suggests we have reached the bottom, bringing about an end to the latest round of economic contractions. He also said data suggest there will be no double-dip recession, or an 'L-shaped' recovery, in which the economy revives but stagnates.

Still, the labor market remains distraught, and the economy will need to stop shedding jobs to begin a real rebound. Since the economy still faces real challenges, Achuthan thinks it will be a "small 'v' shaped recovery instead of a big 'V.'"

The National Bureau of Economic Analysis, which declares the beginning and end of recessions, takes into consideration more factors than just GDP, including job growth. It also doesn't typically doesn't officially call the start or end until several months later.

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kokonut said:

Economy shrank 2 times worse than previously estimated.

Recession Worse Than Prior Estimates, Revisions Show (Update1) - Bloomberg.com

I guess Obama is gonna have another protocol busting talk with the CBO chief soon enough.

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kokonut said:

Economy shrank 2 times worse than previously estimated.

Recession Worse Than Prior Estimates, Revisions Show (Update1) - Bloomberg.com

I guess Obama is gonna have another protocol busting talk with the CBO chief soon enough.

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He’s bleeding on every front. The latest Pew survey shows that only 38 percent of Americans approve of his handling of the economy. In the latest Wall Street Journal/NBC News poll, fewer than half of respondents (48 percent) say Obama can be trusted to keep his word. Gallup has his approval rating at a new low of 52 percent, and Rasmussen has it below 50 percent for the first time.

On almost every domestic issue, polls show that support for Obama and his agenda is plummeting, and that the Democratic party’s advantages over Republicans on the economy, taxes, the deficit, and health care have been erased or severely reduced.
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Obama isn’t supposed to be a typical politician. He was supposed to be The One. He was supposed to change Washington. Transcend race. Fix souls. Bake twelve-minute brownies in seven minutes.

Oprah promised Obama would help us “evolve to a higher plane.” Deepak Chopra said Obama’s presidency represented “a quantum leap in American consciousness.” Last month, Newsweek editor Evan Thomas proclaimed that Obama stood “above the country, above — above the world, he’s sort of God.”

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kokonut said:

The God Who Bleeds....


The God Who Bleeds by Jonah Goldberg on National Review Online

Surprise! Stimulus not stimulating construction industry, infrastructure repair.
washingtonpost.com

A slow bleed....drip...drip...

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deafskeptic said:

We hear you. Oamba is the cause of everything that's wrong with this world. Why he's the anticrist. Libruls are merely his agents to satan's work and Gore is his appointed archangel? :roll: Yeah, right.

What has my post got to do with Obama for ffs? I'm starting to wonder if you're a monomania when it comes to conservatism.

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Foxrac said:

That why I called his post so garbage and not much of his post is true.

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